OTTAWA, March 12 (Xinhua) -- The Bank of Canada on Wednesday reduced its key lending rate by 25 basis points to 2.75 percent.

While economic growth has come in stronger than expected, the pervasive uncertainty created by continuously changing U.S. tariff threats is restraining consumer spending and business intentions to hire and invest, said the central bank in a news release.

Against this background, and with inflation close to the 2 percent target, the Governing Council decided to reduce the policy rate by a quarter point, the Bank said.

The Bank said economic growth in the first quarter of 2025 will likely slow as the intensifying trade conflict weighs on sentiment and activity. Recent surveys suggest a sharp drop in consumer confidence and a slowdown in business spending as companies postpone or cancel investments.

Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not spur further inflation, said the Bank of Canada.